This shift led to higher US Treasury yields and a stronger greenback.
SPI Asset Management managing partner Stephen Innes said that the market had previously expected three rate cuts by the Fed this year.
However, that has now been revised down to one or two, following stronger US economic data and fading recession risks.
“This shift has lifted US 10-year bond yields and made the US dollar more attractive, putting pressure on the ringgit and other regional currencies,” he told Bernama.
Innes elaborated that the weaker ringgit persisted despite the easing of US-China trade tensions, which saw both sides cutting tariffs sharply, down to 30% from 145% on the US side, and to 10% from China.
“Normally, such a move would support risk sentiment and boost Asian currencies, but this time, the market is more focused on interest rates than trade news,” he said.
The asset manager noted that Bank Negara Malaysia is keeping interest rates low, making the ringgit less attractive compared to the US dollar.
“There may also be some early positioning by investors ahead of Malaysia’s gross domestic product release later this week, with talk of a possible downside surprise, but that is likely a smaller factor,” he added.
At 6pm, the local currency depreciated to 4.3185/4.3250 versus the greenback compared to Friday’s close of 4.2970/4.3005.
At the close, the ringgit traded mostly higher against a basket of major currencies.
It was up against the Japanese yen at 2.9181/2.9227 from 2.9565/2.9591, and climbed against the euro to 4.7961/4.8033 from 4.8320/4.8359.
It traded marginally lower against the British pound at 5.7056/5.7142 from 5.7004/5.7050 previously.
The local currency was traded mostly higher against its Asean peers.
It was marginally higher versus the Singapore dollar at 3.3084/3.3137 from 3.3095/3.3124, enhanced against the Indonesian rupiah to 259.7/260.2 from 260/260.4, and surged against the Thai baht to 12.9958/13.0240 from 13.0082/13.0267 at last week’s close.
Meanwhile, the ringgit was unchanged against the Philippine peso at 7.74/7.76, as of last Friday.